Watchdog report faults Medicare agency's contract management

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FILE - In this April 30, 2020 file photo Administrator of the Centers for Medicare and Medicaid Services Seema Verma, speaks about protecting seniors, in the East Room of the White House in Washington. The head of the Medicare and Medicaid programs failed to properly manage more than $6 million in communications and outreach contracts, giving broad authority over federal employees to a Republican media strategist she worked with before joining the Trump administration, a government watchdog said in a report to be released Thursday. Seema Verma, administrator of the Centers for Medicare and Medicaid Services, and other agency leaders did not administer the contracts in accordance with federal requirements, according to the inspector general at the Department of Health and Human Services. CMS is part of the department. (AP Photo/Alex Brandon)

WASHINGTON – The head of the Medicare and Medicaid programs failed to properly manage more than $6 million in communications and outreach contracts, giving broad authority over federal employees to a Republican media strategist she worked with before joining the Trump administration, a government watchdog said in a report to be released Thursday.

Seema Verma, administrator of the Centers for Medicare and Medicaid Services, and other agency leaders did not administer the contracts “in accordance with federal requirements,” according to the inspector general at the Department of Health and Human Services. CMS is part of the department.

The contracts, which are no longer active, were for strategic communications services, such as public engagement and interacting with the media. But the inspector general said CMS used them as personal services contracts and exerted a level of control over the contractors' work that exceeded what's allowed under that type of a federal award.

Verma sharply disputed the inspector general's findings. In a response that accompanies the report, she said CMS has “deep concerns" with the conclusions, which “are based on unsubstantiated assumptions and incomplete analysis." She also said the report relies on mischaracterizations of contractor tasks and duties and misrepresents federal acquisition rules.

Verma, a protege of Vice President Mike Pence, came to the Trump administration after designing Indiana’s Medicaid expansion when Pence was governor of that state.

As head of CMS, Verma has enjoyed strong support from the White House but has clashed with health secretary Alex Azar. Congressional Democrats are wary of her, since she was a supporting player in President Donald Trump’s failed effort to repeal and replace the Obama-era Affordable Care Act.

The GOP media strategist is identified throughout the report by the pseudonym “Brian Smith.” Smith is described as a subcontractor who Verma trusted and had worked with her at the health care consulting firm she ran in Indianapolis.

A government official familiar with the matter confirmed that Smith is Marcus Barlow, who was spokesman for Verma’s firm, SVC Inc. The official was not authorized to speak publicly and requested anonymity.